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Questions about installment credit: Everything you need to know

15 questions about installment credit

Whether long-awaited trip, modern furniture or a new car. In everyday life, there are always situations in which we need money to make certain purchases can. Sometimes we just want to fulfill a long-cherished dream. Even if your own financial resources are currently not enough, you do not have to do without it. With a loan, you can expand your budget in the short term. From the preconditions that you need to fulfill, from Schufa information to interest and transit times, we will guide you through 15 questions on installment credit and get you fit in this area.

1. What requirements do you have to fulfill to get a loan?

They use the loan privately and not for the acquisition or renovation of a property.

You are employed for a permanent job or receive a monthly pension – in short: you have a regular monthly income and can prove this, for example, by paying a salary.

You have an American residence and an American checking account.

You have a good credit rating.

Good to know: The requirements sometimes differ from bank to bank. Therefore, before applying for a loan, you should consult the bank of your choice on the required conditions.

2. Do you need to provide collateral to the bank?

Before the bank grants you a loan, it usually asks for Schufa information to check your credit rating. If this is negative, some banks nevertheless grant a loan. But then you have to offer certain collateral. These serve the bank as a safeguard that they somehow get back the funds they lent you. There are various collateral options.

3. What collateral does the bank accept?

In certain cases, the bank may require additional collateral for an installment loan. These can be:

• Personal security: this is primarily a guarantee. That is, another person vouches for being liable to you if you can not pay back the loan yourself. • Financial Benefits: The Bank has the ability to access the capital from an insurance. Possible, for example, are a capital-forming life insurance, a pension or occupational disability insurance.

As a third variant, there are still the Sachsicherheiten. Behind this is alien, for example, for a plot. This form of security is usually only in connection with a mortgage in question.

4. What documents do you have to submit when applying?

At a direct bank, you simply apply for the loan online. If you would like to have this from a branch bank, you can bring the relevant documents there personally or send them by post. This includes:

Signed contract documents

Payroll from the last two months

Statements of the last two months

Copy of identity card or passport

5. Does the bank get a Schufa statement?

Yes. As a rule, every bank requests information from Schufa to assess its credit rating. Schufa stands for “protection community for general credit protection”. Your task is to protect banks against credit losses on the one hand. On the other hand, the Schufa serves the protection of the borrower. The credit check is designed to prevent you from being over-indebted with a loan if you can not service it.

6. Can I get a loan despite negative Schufa?

For most banks, good credit is a prerequisite for obtaining a loan. As a result, you will only receive one with a positive Schufa, but this is above all for your own safety: you want to prevent yourself from taking out a loan that you can not repay, and then you are in debt. Some credit institutions grant a loan despite negative Schufa, but then demand other collateral.

7. For which terms can you decide?

The terms of an installment loan are individually selectable. Many banks offer maturities between 12 and 120 months.

8. Can the runtime be adjusted in between?

Some banks offer the possibility to adjust the duration in between. Often, however, the credit rating is checked again. In this case, you must conclude a new contract with the bank at the then prevailing conditions.

Inform yourself in advance about all important items on the subject of installment credit **

9. Can you increase the loan volume during the term?

This is like the interim adjustment of the term of the bank too different. Even if the volume of credit increases, the bank checks the creditworthiness again in advance, that is, it fetches Schufa information. You then have to replace your existing loan agreement and agree on a new contract with the bank.

10. How can you calculate the monthly installment for your loan?

Online so-called installment credit calculators are available. Here you can enter any amount and duration and calculate your monthly rate. So you have the opportunity to play through various financing examples to determine individually suitable conditions. You can then apply to the bank.

11. Can you lower the monthly rate?

If you are currently paying off a relatively expensive loan, you can report it to cut costs. In this case, you must replace the existing loan and conclude a contract on new (cheaper) terms. You can apply for a loan repayment request from your current bank. Alternatively, you have the option to switch to another bank.

Tip: Compare the conditions of different banks to find the cheapest offer for yourself.

12. What are the conditions?

The terms of a loan vary from bank to bank. They also depend on your credit rating and the loan amount you wish to raise. You can get an initial overview of the mentioned online installment credit calculator. For detailed information, you should contact your bank adviser. This creates for you first a non-binding offer, which you can then decide if you agree to the terms.

13. Is the interest rate fixed for the entire term?

The terms, including interest rate, you agree before finalizing your loan. Thus, the amount of interest is fixed for the entire term of the loan and does not change. In this way, the installment loan offers you optimal planning security.

14. How are interest rates organized?

In terms of the amount of interest, the bank orients itself to the default interest rate of the European Central Bank (ECB). If this is low, the bank usually requires a lower interest rate than at times of high-interest rates.

15. Are special repayments or early repayments possible?

Some banks require a prepayment penalty for early repayment of a loan. This is no longer the case with most banks, however. Likewise, with the 1822direkt this question to the installment loan is clarified quickly: A premature replacement, as well as special repayment, is possible at any time free of charge. For this, you simply have to transfer the amount available to the installment credit account. This has the advantage of being faster debt free.